Why NFT-Art is Not There Yet, A Warning for Artists and Buyers

Don't get me wrong; I really like the romantic idea of democratizing the Art Market and the equalization of entering an era that will finally credit artists.

Non-fungible Tokens are trending right now, but are they worth the hype?

This article is for every artist (or non-artist) interested in getting on the Crypto / NFT-Art train.

There is no reason for FoMo (Fear-of-missing-out), historically viewed Cryptocurrencies are here to stay

But it is hard to follow the topic with all the abbreviations like ATM's, DeFi, ICO's, NFT, BCC, BCH, ETC and tons of news coming in every day.

As it is now and likely for the next decade, the system is designed for a small group of people.

Since Bitcoin is the most hyped currency but not affordable to most, an increasing number of alternative currencies jump on the market. Because essentially you are going to make money on the people who enter the market after you

And it is not done by entering the Crypto-Market, the system is also designed to keep you there. You can of course make money over there and transfer it to your bank account, but it is just not how that particular market works. You will miss out of gains that may come in 3-5 years from now, this means you should participate if you earn enough to say you don't care about any ETH earned on the "Chain".

It all is one big High-Tech-Pyramid-Scheme.

And here is a hint: those who gained wins from the immense Bitcoin hype are among those who build NFT-Art-Sites to benefit from the next hype, artists are just interchangeable token in that new game of Bitcoin-investors in an attempt to make it appeal to the mainstream.

Talking to some of them made this point very clear to me.

Sharing is A Necessity (And Other Problems)

One thing I have observed first hand on art platforms like Makersplace or SuperRare is that doing the legwork is all on the artists. You need a reasonable following on social Media to announce a working "Art Drop". "Reasonable" means anything between 25k up to 1,2 million followers...

That was what threw me off initially in 2019.

Also what is considered "valuable" to some, is trash to others. 

My personal opinion is that artists I know for a long time, who put their heart and a lot of skills into their work...


Should earn a lot more than that:


But this shows that putting the name out there (which depends highly on luck) is still more important than great work.

Social Media works as a mask to hide the Pyramid-Scheme perfectly since sharing anything is the very nature of platforms like twitter & co. 

But that is just icing on the cake of problems evolving around these Art Platforms as a whole; A deeper issue surfaces when you want to publish an Art-Piece to the blockchain using NFT to attach the Proof of ownership – as under heavy usage that can take from a few hours to days. 

Particularly Makersplace did no changes to the website in order to make it any more convenient or centered around the users in about 2 years, really? A Platform that creates so much value? 

The delayed submission approval process of these platforms also add to the hype as they generate an artificial kind of scarcity.

On Makersplace especially it can take ages when you add tags to the piece before it is published - which results in you having to call a moderator on Discord because you can't delete or change anything on your end.

Snapshot as of March 06. 2021


To get your piece published faster, these platforms benefit from gas you can pay (which is basically a transaction fee) but if you don't have crypto in your wallet just yet, you need PayPal and it makes the whole process a lot more inconvenient as it should be.

The underlying technology aka the blockchain bears great potential but what people make off it today, is mediocre to say the least.

The NFT-Market looks more promising than the regular Crypto Market or even compared to the Stock-Market, liberating to some degree. But this is an illusion as well. See the story of artist Beeple for example, his work sold for a 5 digit number in the primary market and resold on the secondary for a 7-digits number.


What does This Tell Me?

The same thing that happens in the regular Art Market.
It is not about the artist ( sorry Beeple ) but a bit more perverted - it is always about the person buying the art first. 

Sounds familiar if you know how much of a scam the real Art Market is:


At first glance the whole NFT-thing looks different even liberating because artists get a fair share of any resold item, yet it is an even better business for the person having bought the item in many regards.

So the whole economic way of the technology is looking different from the architecture it was meant to be. 

As it is now it resembles a huge monster:

A Kaiju on the Juniata

Bigger than the financial market, similar to a pyramid-system and a scam as the real Art Market on steroids. That beast leaves a trail behind on the environment worse than Godzilla on RedBull. 

This looks like everything but not democratic at all, sorry folks.


Another big problem is the Environmental Impact of Cryptocurrencies today.

I don't want to get into that matter too much, as it is now; Mining the blockchain require huge amounts of power. There is an interesting article from Everest Pipkin about that matter on his Medium, a recommended read.

From an artists point of view it might also be good to read the opinion of Joanie Lemercier about that matter. His article was a turning point for me, to research the topic and find more information about the problem. In the end I closed my Makersplace account because of what I learned.

We are at the edge of a coming change: Ethereum is about to switch from Proof-of-Work to Proof-of-Stake right now. The plan is to complete that switch until 2022, but since this is taking away money from miners, this change could disrupt the market very soon as a 51% Attack is very likely due to the publicity around Cryptocurrencies.

If you want to make the plunge and can wait, this would be a good time to postpone any plans to jump on the NFT-Train as Ethereum is the main currency on most NFT-Sites. I would not want to burn money of collectors of my work due to such a foreseeable event.

The Environmental Issue: Possible Solutions

There are chances the issues can be solved but that would require a different legislation; for example that all independent miners need to provide a proof that at least 60% of power used for mining comes from renewable energy via photovoltaics. 

That would be a good start to be honest!

An alternative would be companies building mining centers running on hydrogen, similar to the google data-centers that run partially with the bloom-box. The blockchain would still run in a decentralized manner but economically it would be a lot more secure and green.

The More Difficult Issue will Be About Trust

There is already a lot of Fraud going on in the Bitcoin-Scene and now in NFT: https://agoradigital.art/blog-crypto-art-fraud-on-rarible/

There are also many stories yet to come about mistrust - the hype is just waiting to release the worst in people. Wait until the first story appears about known artists selling different versions of the same piece which would reduce the trust of digital artists in one day and wipe away many success stories. 

Or let's talk about fake profiles; how far has society come that people start to impersonate artists to gain money? Yes this happened, read about it here: https://www.theverge.com/2021/3/20/22334527/nft-scams-artists-opensea-rarible-marble-cards-fraud-art

Or simply think about the recent case of artistic violence in which a Banksy piece was burned down to go on auction as NFT. WTF!

If such stories inspire anything, I hope no one will get the idea of burning a Monet to do that, why Banksy? Why not a Damien Hirst piece or Jonathan Meese come on, can somebody do that, please? (*Sarcasm off*)

The other thing this tells me is; even more so than the actual Art Market has made me guessing; Using the term Art does not require anyone to be an artist, just burn a piece of Art can help you make a mark - and rich too! 

Value Concerns

One thing that also stands out in the alley of downsides to this is the unpredictable outcome of value of NFT's or rather ETH spent, since that is depending on the Blockchain it was mined on. 

For now ETH might be safe but with the hype, a lot of new technologies evolve around that and may outperform Ethereum in the near future. If you know how your stuff works you can lean back, if not, I'd encourage to read this article: https://fortune.com/2021/03/10/are-your-nfts-on-the-wrong-blockchain/

One big concern should be securities as many high-tiered NFT's may become illegal because shared value is a securityhttps://decrypt.co/62989/sec-hester-peirce-nfts 

And if that would not be enough; what do you do if your NFT's vanish? Vice's article sheds some light on a current case: https://www.vice.com/en/article/pkdj79/peoples-expensive-nfts-keep-vanishing-this-is-why

The TAX and VAT-question is also not yet cleared fully, but it is safe to say that every transaction needs to be well documented, especially if you earn a lot of money in Cryptocurrencies. It can come back at you years later but to be honest for artists taxes are already a burden, who's got the time for this extra pile of paperwork?

And one last concern is that Crypto-Currencies are a closed system. For that currency to rise it needs people who invest and stay there. The NFT-craze is working in the opposite direction because artists usually need the money and transfer a lot to their bank accounts. More artists on the Blockchain means shrinking value. I'm not too much in Ethereum to know if that is true or not, but for Bitcoin it would be the case.

Technology and every aspect of the market is there to evolve. This is all fine and good, however with so much misinformation out there, it is difficult to make the right decisions right now. As independent artist, I hate to say this, but the Crypto Market needs more and better financial legislation.

If there is a takeaway of all this, it might be just that: 

  • Get on the wagon early on 
    It is already to late for Bitcoin but being early in the game might be still helpful
  • Don't expect too much
    The rise of crypto-influencers stems from Social-Media Influencers, focus on getting known and see where it can take you. Not the other way round.
  • Because Pareto might be at work on the NFT-Market as well, which means:
    Only 20% of Crypto Artists share 80% of the revenue, 80% of Artists have to share the rest of 20% which is nuts (pun intended)
  • Compare sites and technology
    Especially prefer off-chain transactions and green tech
  • Learn about the pitfalls of editions and proof-of-ownership
    and see if it can benefit your work at all
  • Remember, not the amount of transactions blows the CO2-footprint, but the value
    The rich people are destroying our planet not only in RL but also on the blockchain
  • Think about the fact that earning money with cryptocurrencies may be more unstable than any currency exchange on PayPal or analog currencies can experience today
In the recent weeks I got inquiries from at least 10 (existing and emerging) NFT-Art Websites and I guess many artists will have a similar experience and are not sure whether it might make sense to jump on that train - or particular site.

Important Questions to Ask

Over the last couple of weeks I have gathered a list of questions that I send out to the "Talent-Scouts", feel free to use them yourself:

  1. What Blockchain will your NFT's be mined on?
  2. What will you do to promote responsibility to the environmental impact NFT's and the Blockchain cause today?
  3. Or better said; what better technology can you offer that works directly against the negative impact?
  4. How will ... NFT-Site in question....promote artists and their work?
  5. How much work will artists have to do to get anything sold?
  6. Is there an ad-network planned? (Think about Etsy, Ebay or Amazon promoted listings)
  7. Will it be possible to submit NFT-Artworks without paying Gas to speed the process up?
  8. Will the website change and be optimized to focus on user experience?
  9. How will you obtain security for the value customers put into the site, brand and artists work?
  10. How will you handle a crowd of submissions to the site if hyped or got viral?
  11. How is the transactions from and to PayPal (from or to a wallet) be handled?
  12. What are the fees for that?
  13. How will you handle the necessity for collectors to find new artists through your site?
  14. How do you plan to implement the secondary market into your business?
  15. Will submissions be curated to prevent that "burning other artists' work for example" does not have the chance to hurt artists on board due to a possible public backlash such an act could cause?
You can use all or just some of the questions that are important to you. Most likely you will hear answers (especially about the environmental impact) that you don't like. 
Knowing that time is not an issue and that you are not going to be rich just by joining these sites may help to decline any offer that comes around.

To catch up with the title and the argument as to why Crypto art will most likely never be there...

Make no mistake; the technology is almost there, but exactly like the Stock Market it will attract a certain kind of participants - that means it is just not for everybody.

Being "There" in my book means a technology like the internet, so huge and important it had to be there someday, but truth is the blockchain is too clumsy yet (like the internet was a bumblebee in its early days). My argument goes into the future and if I could buy stocks of the Blockchain of the future that is meant to stay, I'd do so but as it is now - it is against humanity and can't stay.

Are you a Crypto-Artist? How is your experience?

If you are a Talent-Scout or CEO of such a company or site, what are your plans to set things right?

I'd like to read as many opinions on that particular topic as possible.

Let me know what you think in a comment.

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Written by

Oliver aka Fantasio is a creative blogger who likes to share his insights about art, marketing and social media. Follow Fantasio on twitter or facebook

4 comments:

  1. Oh well... That makes me re-think of this NFT thing. I got hyped by this cause I've seen that people are earning a real good amount of money with their stuff. But well, i guess that's the first impression of everyone else, the fact is that it became so popular lately that is almost impossible to get in one of those sites such as supeRare, Makers place, KnownOrigin etc, unfortunately i missed the beginning of it all and I'm pretty late in this. I was so hyped that i spent about 80 USD to mint something at Rarible, but I'm starting to regret that.

    One of the factors that made me get interested is that i could try making my most "collectible" art series to have some commercial value, but after scrolling the Rarible market i could see that it is just not profile of art, there are lots of pretty random stuff being sold at high rates and honestly i wasn't ever attracted by doing thing just to earn money. Also my application to Known Origin wasn't accepted (at least so far) their latest announcement of art sellers was composed of pretty much 3D artists with a pretty similar style.

    getting an invite is almost impossible, there are tons of people asking for it in Their Discord channels.

    I feel a bit dumb to be so vulnerable of the thing of "easy money"

    ReplyDelete
  2. @Iskander -
    That is totally understandable! In the past ten days I have seen the tag #NFTart more on one day in my Instagram feed than in the past 3 years together!

    It is true that "there is no such thing as a free lunch", there are those who have been too early in the market (and left it unused) those who came at the right time and made the best use of it and those that came later on.

    I would not worry too much about that. This is most likely no rejection but a case of "submission-overload" on those Art-Pages!
    The whole thing is meant to create a feeling of artificial scarcity. Everything in the world is a copy and every person is a unique individual. The world is trying hard to tear that image apart.



    ReplyDelete
  3. Thessian3/18/2021

    [Doing a bit lazy Copy/Paste from your Profile on Deviant Art :)]

    At first I was enthusiastic about whole NFT thingy. Because I understood it wrong. And I mean totally wrong.


    I thought it's some kind of authentication system with NFT. In that form it would eliminate on-line art theft. Example:


    No NFT - You download "free" work form site 1 and then go to site 2 and sell there under your own name. No problem.


    But if NFT would work as a kind of embedded PGP set of keys for art it would eliminate art theft.


    You download again "free" work with embedded security hash from site 1 and then you go to site2 to sell it. But this time Site 2 requires you to upload matching proof of authenticity in the form of NFT. But you got none (because only original artist has it). Zonk! No easy money for you.


    In this form, as a security system, not as a cryptocurrency scam again it would be glorious. No mining of any kind. NFT as a cryptographic Tool, where only original Artist can prove authenticity of the work. NFT in current form is just another financial piramid. It'll crash sooner or later.


    Look I've mined cryptos. I've mined BTC when it was still easily possible to mine it directly on normal computers not designated ASICs. But I was always an idiot idealist, I've mined because I wanted to buy stuff with it, not to sit on that for 30 years hoping I have nice pay-off at the other end of that tunnel. Cryptos just like any other fiat currency is gigantic scam just waiting to burst. No major economy is safe form going under, just like BTC market. When somebody dumps like 5 billion of BTC into market one day, 99.9% of suckers will be left with nothing. And let's not forget that mining all cryptos uses like 25% of power generated world-wide and it goes up every day. That's just plain bonkers and unsustainable. Just as the World doesn't have enough problems...

    ReplyDelete
  4. @Thessian: Thanks for the comment and insights! Many miners also wait for the NFT they got as an extra, it is just the different mentalities at play. Some win and some loose in that very game.
    The problem imho is that artists become the interchangeable object in that particular game. NFT-Art is today, tomorrow it will be NFT Lipstick or NFT-Waifu's or an NFT-Series on Netflix. The options are endless and artists are just the pioneering face to make that technology more appealing to the mainstream.

    ReplyDelete

 

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